Business Law and Taxation

FATHER SATURNINO URIOS UNIVERSITY Pre-Board Examination

Accountancy Intensive Review

Name: _______________________________________________________

General Instruction: This test is a multiple-choice test which will take three hours. The test is composed of 70 items, both
theories and problems in business laws and taxation. Read each item carefully and use your knowledge in business laws
and taxation when answering each item. No extra sheet of paper must be provided; however, you may use this
questionnaire as your solution paper. A separate answer sheet is provided for you to shade. Remember, you can only use a
PENCIL No. 2 when shading. Lastly, erasure on the answer sheet is strictly prohibited. Secure that the answer sheet is
clean, free from alterations, and any unnecessary writings/markings.
BEGIN

1. The negotiable character of an instrument is affected by a provision

a. Authorizing the sale of collateral securities in case the instrument is not paid at maturity.
b. Authorizing a confession of judgment if the instrument is not paid at maturity.
c. Giving the marker an election to require something to be done in lieu of payment of money.
d. Waiving the benefit of any law intended for the protection of the obligor.

2. Rules on construction where instrument is ambiguous, except

a. If not dated, the date is considered to be the date of issuance.
b. Where the signature is placed and is not clear in what capacity the person intended to sign, he is deemed
an accommodation party
c. Between printed and written provision, the written provisions prevail
d. Instruments containing the words “I promise to pay” signed by two or more persons, such persons are deemed
jointly and severally liable

3. A offered to sell his house and lot to B for P1,000,000 giving the latter 30 days to prepare the P1,000,000, and as soon
as B is ready with the money, A will execute the Deed of Sale. On the 15th day, A told B that he has increased the price
to P1, 500,000. Can B compel A to execute the Deed of Sale at the price of P1,000,000?
a. Yes, because there was actually meeting of the minds of the parties.
b. No, because B never signified his acceptance of A’s offer.
c. Yes, because A is already estopped by his offer.
d. No, because P1,000,000 is less than P1,500,000.

4. P appointed A as his agent orally to sell his parcel of land for P20,000. ten days later, A sold the same property for
P300,000 through a public instrument executed between him and B. What is the effect and status of sale between A
and B?
a. The sale is valid because A was authorized and it was executed in a public instrument.
b. The sale is unenforceable because the agent went beyond the scope of his authority for selling the land for a price
higher than the price agreed upon.
c. The sale is void because there was no valid appointment of A as agent of P.
d. The sale can be ratified although the appointment of A was done orally because the sale between A and B was in a
public instrument.

5. The following are considered elements of the contracts of pledge and mortgage. Which is the exception?
a. The pledgor or mortgagor must have the free disposal of the thing pledged or mortgaged
b. The pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged
c. Both are accessory contracts
d. The thing maybe appropriated if the debtor cannot pay

6. A, B and C, co-owners of a particular parcel of land, borrowed P75,000 from X and Y. The three (3) debtors signed a
promissory note on January 10, 2006 promising to pay the creditors on or before April 3, 2006. In addition, the
debtors constituted a mortgage on their property in favor of the creditors. On maturity date, X demanded payment.
How much can X collect from C upon maturity of the obligations (creditors are solidary)?
a. P50,000 as it represents the actual share of X in the credit.
b. P25,000 as the obligation is presumed to be joint and the amount represents C’s share in the obligation.
c. P75,000 based on the promissory note
d. P75,000 because the nature of the obligation is solidary

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FATHER SATURNINO URIOS UNIVERSITY Pre-Board Examination
Accountancy Intensive Review
7. Using the preceding number, if C paid X his share in the obligations, can he, as co-owner of the property, seek a partial
release of the mortgage constituted thereon?
a. Yes, because C is answerable only for P25,000
b. Yes, because C’s obligation is already extinguished
c. No, because mortgages are considered indivisible, payment in part shall not extinguish the obligation
d. No, because the obligation is solidary, payment in part shall not extinguish the obligation secured by mortgage

8. Where a director by virtue of his office, acquired for himself opportunity which belongs to the corporation, thereby
obtaining profits to the prejudice of such corporation, must account to the latter for all such profits by refunding the
same, unless his act is ratified by
a. A vote at a regular or special meeting by stockholders owning or representing a majority of the outstanding
capital stock.
b. A vote of the stockholders owning or representing at lease one-third of the outstanding capital stock
c. A unanimous vote of all the stockholders of the corporation
d. A vote of the stockholders owning or representing at least two-thirds of the outstanding capital stock

9. When a borrower uses the thing for a purpose different from the intended, delays its return to the owner, receives the
thing under appraisal, lends to third person or saves his property instead of the thing in cases of emergency, shall be
liable even in cases of fortuitous events, because
a. The nature of the obligation requires an assumption of risk.
b. The parties have expressly stipulated on such liability.
c. The debtor in delay.
d. The law expressly so provides

10. A distribution by a corporation of shares of stock held by it in another corporation is

a. Case of declaration of stock dividend
b. Situation equivalent to a sale of assets
c. Situation equivalent to a merger or consolidation
d. Property dividend or an actual distribution of corporate assets

11. A delivered to B 10,000 pieces of Davao fabricated shell craft jewelry for the purpose of selling them at P1.00 each.
Out of the proceeds of the expected sale, B is to receive a 10% commission. After 3 days, however, B sold all items at
P1.50 each to C, but on 30-day credit. A compelled B to pay. Which is correct?
a. B must pay P10,000 immediately
b. B cannot be compelled to pay at all
c. B must pay P15,000 immediately
d. B must pay P5,000 immediately and P10,000 after 30 days

12. Statement No. 1 – Juridical personality of partnership begins on the date of the execution of the articles of partnership
unless a specific date is agreed for its existence.
Statement No. 2 – Juridical existence of corporation commences on the date of the execution of the articles of
incorporation unless a specific date is agreed for its existence.
a. Statement No. 1 and Statement No. 2 are both correct.
b. Statement No.1 and Statement No. 2 are both wrong.
c. Statement No.1 is correct while Statement No. 2 is wrong.
d. Statement No. 1 is wrong while Statement No. 2 is correct.

13. A guardian of B sold B’ house and lot worth P480,000 for P240,000. This contract can be:
a. Rescinded because of inadequacy of price.
b. Cannot be rescinded because there is no fraud, mistake or undue influence
c. Cannot be rescinded because all the elements of contract are present.
d. Rescinded because the consent of the ward was not obtained.

14. The right of the corporation to continue as a juridical entity for the term stated in the articles of incorporation despite
the death of the stockholders:
a. right of existence c. right of succession

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FATHER SATURNINO URIOS UNIVERSITY Pre-Board Examination
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b. pre-emptive right d. right of appraisal

15. The voting requirement in case of incurring or increasing bonded indebtedness.

a. majority of the board and majority of the outstanding capital stock
b. majority of the board and 66 2/3% of the outstanding capital stock
c. 2/3 majority of the board and majority of the outstanding capital stock
d. 2/3 majority of the board and 2/3 of the outstanding capital stock

16. ABC Corporation is engaged in investment of funds as shown in its primary purpose. If today, ABC Corporation
decides to invest in XYZ Corporation, what is the voting requirement?
a. majority of the board and majority of the outstanding capital stock
b. majority of the board and 66 2/3% of the outstanding capital stock
c. 2/3 majority of the board and majority of the outstanding capital stock
d. majority of the board and none of the outstanding capital stock

17. A, B and C formed a general partnership with a gross capital of P90,000. They agree that the profit and loss sharing is
50:25:25, respectively. Upon dissolution and after exhausting the partnership capital, X has still a collectible amount
of P30,000 from the firm. How much can X collect from C alone?
a. P7, 500 b. P15, 000 c. P30,000 d. P10,000

18. A day after the issuance of the certificate of incorporation of XYZ Inc., M, one of the directors discovered that the paid
in capital was only 24% of the subscribed capital stock. Nevertheless, it organized itself and represented to the public
as a corporation. What kind of corporation is XYZ Inc.?
a. de jure corporation c. de facto corporation
b. corporation by estoppel d. corporation by prescription

19. Jose condoned the obligation of Pedro of P250,000 without any written document. A day after the condonation, Jose
died. The heirs of Jose, after the burial, demanded from Pedro the sum of P250,000 as they are going to pay the
expenses for the burial of Jose. What is the status of the condonation of Jose to Pedro?
a. Valid b. Void c. Unenforceable d. Voidable

20. One of the requisites of a negotiable instrument is that it must contain an unconditional promise or order to pay a sum
certain in money. Which of the following denotes non-negotiability?
a. I promise to pay to the order of L the sum of $900 at the DBP Manila
b. I promise to pay to the order of Y the sum of $600 and to deliver one-fourth of the rice in my farm
c. I promise to pay N or bearer in Manila the sum of P18,000 in Philippine pesos or in US dollars
d. I promise to pay E or bearer in Manila the sum of P27,000 in Philippine pesos or US dollars, at the option of the
holder

21. One of the following is not a characteristic of contract of partnership.

a. Real, in that the partners must deliver their contributions in order for the partnership contract to be
perfected
b. Principal, because it can stand by itself
c. Preparatory, because it a means by which other contracts will be entered into
d. Onerous, because the parties contribute money, property, industry to the common fund

22. Recording in the Registry of Property in the appropriate book is required for the validity of the contract of:
a. Chattel mortgage c. Conventional pledge
b. Real mortgage d. Antichresis

23. A, B, C and D, joint debtors, are obliged to give V, W, X, Y and Z, solidary creditors, P 20,000.00
a. V may collect from B P 20,000 c. V may collect from B P 5,000
b. V may collect from B P 4,000 d. V may collect from B P 1,000

24. The following are modes of extinguishing an agency, except:

a. Death, civil interdiction, insanity or insolvency of the principal or agent
b. Accomplishment of the purpose of the agency

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FATHER SATURNINO URIOS UNIVERSITY Pre-Board Examination
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c. Expiration of the period for which the agency was constituted
d. Continued losses on the part of the principal or agent

25. A gets a loan of P 1,000,000 from B which becomes due on October 1, 2008 and mortgaged his house as security for
the debt. On June 30, 2008, the mortgaged house completely destroyed the fire through the fault of C. A week later, B
demanded payment from A. Is B’s demand valid?
a. No, the destruction of the house was not thru the fault of A.
b. No, the obligation is one with a definite period which is deemed intended for the benefit of both the debtor and
creditor
c. Yes, the debt becomes demandable unless A can give another security equally satisfactory
d. Yes, the debt becomes demandable even if A can give another security equally satisfactory

26. One of the following characteristics of dacion en pago is also a characteristic of a contract of sale. Which is it?
a. There is a pre-existing credit
b. Obligations are extinguished
c. There is less freedom in fixing the price
d. Ownership of the object transferred to the other party

27. One of the following is a ground for the suspension or revocation of the certificate of incorporation by the SEC:
a. If the corporation has commenced its business transactions but afterwards ceased operations
continuously for a period of at least 5 years.
b. If the corporation fails to commence and start to operate and the failure is due to causes beyond its control.
c. If the corporation does not formally commence its business transactions within 2 years from the dare of
incorporation.
d. If the corporation has commenced its operations and subsequently become continuously inoperative for 2 years.

28. Samarano is the owner of 500 shares of stock of Center Sales Corporation whose articles of incorporation provide for
5 directors. In the annual election of directors, the following ran for the position of directors: Abanes, Baricuatro,
Castillo, Doromal, Elmora and Filamor. Samarano asks you which of the following the incorrect way of casting his
votes is.

a. 2,500 votes for Abanes

b. 500 votes each for the 6 candidates
c. 500 votes each for Abanes, Baricuatro, Castillo, Doromal, and Elmora
d. 1,000 votes for Abanes, 1,000 votes for Baricuatro, and 500 votes for Castillo

29. In three of the following wrongful acts of partners, the partnership is solidarily liable with all the partners to third
persons. Which one is the exception?
a. For loss or injury caused to a third person by reason of the wrongful act or omission of a partner acting in the
ordinary course of business.
b. Where a partner acting within the scope of his apparent authority receives money or property of a third person
and misapplies it.
c. Where the partnership receives money or property of a third person in the ordinary course of business and such
money or property is misapplied by a partner while it is in the custody of the partnership
d. For loss or injury caused to a third person by reason of the use of partnership property by a partner for
personal use.

30. X, Y and Z are partners, with X contributing P60,000; Y P40,000; and Z service. They agreed to divide the profits and
losses in the following proportions: X, 35%, Y 25% and Z, 40%. If the partnership earned a profit of P10,000, how
should that profit be shared by the partners?
a. X P6,000; Y P4,000; Z nothing
b. X P3,500; Y P2,500; Z P4,000
c. X P5,000; Y P3,500; Z P2000
d. X P4,500; Y P3,000; Z P2,500

31. Sisa, a general partner in Sissy Partnership, was rumoured to be insane starting last December 31, 2013 due to stress
and so much fatigue. Her actions are not much like of a normal person usually does, so her husband, Siso, decided to
consult a psychiatrist in their neighboring barangray. However, since it was New Year’s Day on the next day, Siso

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FATHER SATURNINO URIOS UNIVERSITY Pre-Board Examination
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decided to wait until January 2. On the said day, together with Sisa, Siso went to a near hospital and had Sisa
examined, and truly, it was proven that Sisa is really insane. Is Sissy Partnership dissolved?
a. Yes, because it is already declared that Sisa is insane.
b. Yes, since the time Sisa was suspected as being insane, the partnership was automatically considered dissolved.
c. No, because Sisa should undergo further testing to validate psychiatrist’s test result since one examination is not
enough.
d. No, only the court can declare whether Sisa is insane or not, and whether the partnership is dissolved or
not.

32. Which of the following statements is not correct?

a. A non-resident citizen who is not engaged in trade in the Philippines is treated as a non-resident alien
who is not engaged in business in the Philippines.
b. An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract
worker is taxable on income from sources within the Philippines.
c. A seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a
member of the complement of a vessel engaged exclusively in international trade shall be treated as a non-
resident citizen.
d. An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources
within the Philippines.

33. Which statement is wrong? The amount on which the fringe benefit tax rate is applied
a. Reflected in the books in the two accounts of fringe benefits and tax
b. The gross-up monetary amount of the fringe benefit
c. The amount deductible by the employer from his/its gross income
d. The monetary value of the fringe benefit

Randy received the following income in 2009:

Business income, Philippines P 300,000
Business income, United States 250,000
Expenses, Philippines 200,000
Expenses, United States 125,000
Interest on deposit with Metrobank 3,000
Cash prize won in a local contest 6,000
Cash prize won in a contest in U.S. 10,000
Winnings in lotto 20,000
Winnings in lotto in U.S. 50,000
Dividends from SMC, a domestic company 25,000
Interest on deposit in U.S. ($1 = P48) $ 500

34. The taxable income if Randy is a resident citizen, single, is:

a. P 259,000 b. P309,000 c. P265,000 d. P315,000

35. The taxable income if Randy is a non-resident alien ETB, married with five dependent children, is:
a. P 109,000 b. P134,000 c. P56,000 d. P106,000

36. The income tax of Randy assuming he is a non-resident alien NETB, single, is:
a. P 71,000 b. P83,500 c. P284,000 d. P334,000

37. Nina, a resident citizen, had the following incidental income in 2009:
Interest on Philippine currency bank deposit P 30,000
Interest on foreign currency deposit under the
Expanded foreign currency deposit system 50,000
Royalty from invention 150,000
Royalty from musical compositions 80,000
Dividend from domestic corporation 60,000
Share in net income of business partnership 100,000
How much is the total final taxes?
a. P 53, 000 b. P57, 750 c. P63, 750 d. P70, 000

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38. Piolo paid his income tax liability for 2009 on January 15, 2010. It was found out later on June 30, 2010 that he
overpaid by more than P100,000. Assuming his claim for tax refund was denied and the denial was received on April
30, 2013, the proper remedy available to Piolo is?
a. Appeal to Court of Tax Appeals on or before May 15, 2013.
b. Appeal to Court of Tax Appeals on or before May 20, 2013.
c. File a motion for reconsideration on or before May 30, 2013.
d. No more remedy since the two-year period already expired.

39. In 2011, Ryan sold a piece of land which had a cost of P1000,000 for a selling price of P4,000,000. The sale called an
assumption by the buyer of a mortgage on the land of P1,500,000, cash of P500,000 on the date of sale and installment
payments of P500,000 every year thereafter. The land is an ordinary asset of Ryan. The income to be reported in
2012, under installment method of reporting income is
a. P500,000 b. P750,000 c. P375,000 d. P1,000,000

40. Ninja Corp. a regional operating headquarters of a multinational Corporation, established in the Philippines provided
its employees cash and non-cash fringe benefits in 2010 as follow:
Total Fringe Benefits P 1,000,000
60% of said amount was given to rank and file employees
40% of said amount was given to corporate officers as follow:
To resident citizens 45%
To non-resident aliens not engaged
In business in the Philippines 35%
To special aliens and Filipino employees 20%

The fringe benefits tax due is

a. P188,235 b. P84,706 c. P145, 489 d. P60,704

41. What is the effect of on the tax liability of a taxpayer who does not protest an assessment for deficiency taxes?
a. The taxpayer may appeal his liability to the CTA since assessment is a final decision of the Commissioner on the
matter.
b. The BIR could already enforce the collection of the taxpayer’s liability if it could secure authority from the CTA.
c. The taxpayer’s liability becomes fixed and subject to collection as the assessment becomes final and
collectible.
d. The taxpayer’s liability remains suspended for 180 days from the expiration of the period to protest.

42. Similarities of police power, power of taxation and power of eminent domain, except:
a. There is compensation
b. Sovereign powers of the government
c. There is taking of property
d. Superior to non-impairment clause

43. Virgin is a producer of cooking oil from coconut and corn. Previously exempt from the value-added tax, he became
subject to the value-added tax on January 1, 2010. For January 2010, with sales, value-added tax not included, of
P700,000, he had the following other data for the month:
Inventory, January 1, 2010: NRV Cost
Corn and coconut purchased
from farmers P 120,000 P 100,000
Packaging materials purchased
from VAT suppliers 24,640 22,400
Supplies purchased from VAT suppliers 11,200 13,440
Purchases during the month of coconut
and corn from farmers 330,000
Purchases during the month from VAT suppliers:
Packaging materials 56,000
Supplies 16,800

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44. The value-added tax payable for the month is:
a. P 62,328 c. P 59,400
b. P 58,920 d. P 62,238

45. One of the following is a correct amusement tax rate:

a. 30% on jai-alai and racetracks
b. 18% on boxing exhibitions
c. 15% on cockpits, cabarets, night and day clubs
d. 10% on professional basketball games

46. 1st Statement: Dividend received by an individual from a corporation is not subject to additional community tax.
2nd Statement: Dividend received by a corporation from a corporation is subject to additional community tax.
a. True, True c. True, False
b. False, False d. False, True

47. Consider the following given:

Philippines Foreign
Gross estate P 6,000,000 P 4,000,000
Claims against the estate 1,000,000 1,000,000

How much was the Philippine estate tax due if the decedent was a non-resident, not citizen of the Philippines, and
there was a foreign estate tax payment of P 400,000?
a. P0 c. P571,875
b. P515,000 d. P443,000

48. The head priest of the religious sect Tres Personas Solo Dios, as the corporation sole, rented out a 5,000 meters
squared lot in its names for use as school site of a school organized for profit. The sect used the rentals for the support
and upkeep of its priests. The rented lot is
a. Not exempt from real property taxes because the user is organized for profit.
b. Exempt from real property taxes since it is actually, directly, and exclusively used for religious purposes.
c. Not exempt from real property taxes since it is the rent, not the land, that is used for religious purposes.
d. Exempt from real property taxes since it is actually, directly, and exclusively used for educational purposes.

49. Which of the following is deemed sale transaction under the value added tax law?
a. Consignment of goods made within 60 days.
b. Beginning inventory of close business.
c. Transfer, use, consumption not in the course of business of goods originally intended for sale.
d. Distribution to shareholders of stock dividends.

50. Falcon Co., a VAT-registered taxpayer, is a customs broker and a forwarder, representing importers at the piers
and transporting their importations to warehouses all over Luzon. On an importation by Gencor Co., its costs were
(taxes not included) as follows:
Invoice cost of importation
(Exchange rate is $1: P56) $ 30,000
Expenses on the importation up to Philippine port P 20,000
Excise tax 10,000
Customs duty 15,000
Customs brokerage charges paid to Falcon Co. 8,000
Forwarding charges paid to Falcon Co. 25,000

The value-added tax of Gencor Co., before any tax credits, is:
a. P 210,960 c. P 173,300
b. P 175,800 d. P 207,960

51. The following selected cumulative balances were taken from the records of a domestic corporation in its fifth year of
operations in 2009. It had an income tax refundable of P 10,000 for the previous year for which there is a certificate of
tax credit.
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.

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Gross profit P 800,000 P 1,600,000 P 2,400,000 P 3,100,000
Capital gain on sale directly to buyer
of shares of domestic corporation 50,000 50,000 50,000 100,000
Dividend from domestic corporation 10,000 10,000 20,000 20,000
Interest on Philippine
currency bank deposit 5,000 10,000 15,000 20,000
Business expenses 600,000 1,200,000 1,700,000 2,100,000
Income tax withheld 15,000 35,000 65,000 115,000

The income tax due and payable at the end of the year:
a. P320,000 c. P55,000
b. P350,000 d. P40,000

52. Which of the following statements is not correct in succession?

a. Legitimate children share equally in their legitime of ½ of the net distributable estate.
b. When the spouse survives with one legitimate child, the legitime of the spouse is ¼ of the net distributable estate.
c. When the spouse survives with two legitimate children, the legitime of the spouse is ¼ of the net distributable
estate.
d. The legitimes of the legitimate and illegitimate children take precedence over the legitime of the
surviving spouse.

53. A donor gave the following donations in year 2012:

January 24 - Land located in the Philippines valued at P 2,000,000 to her uncle subject to the condition
that her uncle will pay the donor’s tax due and to assume the mortgage to which he agreed to pay
the mortgage amounting to P 500,000.
Novmber 30- Building in US valued at P 4,500,000 to her sister. Donor’s tax paid in US was P 400,000.
The donor’s tax due on January 24 was
a. P 84,000 b. P 92,000 c. P 450,000 d. P 480,000

54. A land worth P 1,000,000 when inherited 4 and half years ago by the decedent from his father with a mortgage
assumed of P 200,000, 60%of which was paid by the decedent before he died. Fair market value of the land upon
death amounted to P 1,500,000. The gross estate, inclusive of the land, was P 8,000,000 and deductions reached P
750,000, 40% of which represents the ELIT and TPP. Compute for the vanishing deduction.
a. P 149,600 b. P 146,900 c. P 169, 400 d. P 164,900

55. The spouses Helena and Frederico wanted to donate a parcel of Land to their son Gerrick who is getting married in
December, 2011. The parcel of land has a zonal valuation of P 420,000. What is the most efficient mode of donating
the property?
a. The spouses should first donate in 2011 a portion of the property valued at P 20,000 then spread the P 400,000
equally for 2012, 2013, 2014 and 2015.
b. Spread the donation over a period of 5 years by the spouses donating P 100,000 each year from 2011 to 2015.
c. The spouses should each donate a P 110,000 portion of the value of the property in 2011 then each should
donate P 100,000 in 2012.
d. The spouses should each donate P 100,000 portion value of the property in 2011, and another P 100,000 each in
2012. Then, in 2013, Helena should donate the remaining P 20,000.

56. Which of the following statements is correct as regards a resident citizen?

a. Income from illegal activities are subject to final tax

b. Income tax refunds constitute taxable income to the taxpayer

c. Recovery of bad debts previously written off is part of taxable income
d. As a rule, contest awards and prizes are subject to 29% final tax if they amount to more than P 10,000,
otherwise they will be part of taxable income.

57. P. Nagpala, a Filipino, married to Maharot with whom he has two children died on February 14, 2011. The inventory of
the properties of the spouses show the following:
 House and lot in Manila owned by P. Nagpala before
the marriage P 3,000,000

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 Agricultural land owned by Maharot before the marriage 1,200,000
 Real property acquired during marriage 2,000,000
 Family home acquired during marriage 2,200,000
 Personal property acquired during marriage 1,400,000
 Commercial building in Makati inherited by P. Nagpala
during marriage from his father on February 14, 1987 2,000,000
 Apartment house inherited by Maharot during marriage
from her mother who died on February 14, 2003 4,000,000
 Proceeds of life insurance where the estate of P. Nagpala
was designated as the irrevocable beneficiary 1,000,000
 Proceeds of life insurance where Maharot was designated
as the irrevocable beneficiary 2,000,000

Deductions claimed by the estate:

 Legacy given in favor of the Philippine Government in decedent’s will, P 300,000.

 Claims against the estate (duly notarized), P 100,000.
 Unpaid mortgage on the agricultural land, P 400,000.
 Funeral expenses, P 180,000.
 Judicial expenses (substantiated), P 600,000.

How much is the estate tax due and payable?

a. P 549,000 c. P 624,000
b. P 564,000 d. P 604,500

58. A Philippine National chartered a foreign vessel of non-resident lessor for P 500,000. How much should be paid to
non-resident lessor, net of withholding tax?
a. P 450,000 c. P 477,500
b. P 462,000 d. P 500,000

59. A and B are stockholders in corporations which are being consolidated into a new corporation, had the following data
on their shares of stock:
A___ ____B___
Consideration Received:
Fair Market value of shares P 75,000 P 81,000
Fair Market value of property 5,000 5,000
Cash 10,000 4,000
Cost of shares surrendered 80,000 80,000

The gain or (loss) to be recognized by B is

a. P 10,000 c. P 1,000
b. P 9,000 d. P 0

60. One of the following is not subject to the 3% percentage tax

a. International air carrier doing business in the Philippines
b. International shipping carrier doing business in the Philippines
c. Domestic carriers and keepers of garage
d. Franchise grantee of electric utilities

END

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